Ask A Commercial Litigation Attorney: What Can I Do If Someone Sells Me Defective Goods?

There’s nothing more frustrating or disappointing than discovering that the goods you’ve bought are defective. Whether you’re a small business owner who has received faulty merchandise from a supplier, or a large corporation that has purchased an entire shipment of defective goods, there are several steps you can take to enforce your rights – as any commercial litigation attorney will tell you. In this article, we’ll be discussing the legal consequences of supplying defective goods from the perspective of the law of contract, although it is important to note that in cases where the defective product has resulted in a personal injury, a product liability claim may also arise.

What Does Your Contract Say?

If you’ve received defective goods, that are not fit for purpose or differ significantly from what the supplier promised you, your first step is to consider the terms and conditions of your contract of sale. Checking the terms of the contract will help you to understand whether a warranty may have been breached. It is a good idea to consult with a commercial litigation attorney, as they will have the skills and expertise to help you understand any complicated legal jargon in your contract.

Note that in Florida contract law, not all the terms of a contract are necessarily ‘express’ – some are ‘implied’, in other words, they are automatically included in the contract by law, regardless of whether they were also recorded in writing (in the case of a written contract) or speech (in the case of a verbal contract).

Express Warranties

An express warranty is a warranty that has been explicitly included in the contract, in terms of which the seller makes certain representations (i.e. promises) regarding the quality or condition of the goods being sold. Even a mere statement that describes the goods to be delivered is an express warranty.

Implied Warranties

By contrast, implied warranties are automatically included in the contract by law. These warranties are set out in the Uniform Commercial Code (UCC). The UCC is a set of laws governing commercial transactions which have been uniformly adopted by all states, to facilitate and regulate interstate commerce. The UCC may be found in Title XXXIX, chapters 671-680 of the Florida Statutes. The most important implied warranties that are incorporated into commercial contracts by the UCC are the implied warranty for merchantability and the implied warranty of fitness for a particular purpose.

Types Of Implied Warranties

The implied warranty for merchantability is essentially a warranty that the goods to be supplied meet a basic level of quality, are fit for the ordinary purpose for which they are to be used, and conform to any promises made on the product’s container or label.

The implied warranty of fitness for a particular purpose warrants that the goods to be supplied are suitable for a particular purpose, and applies when the buyer made the intended use of the goods known to the seller before purchasing them.

Breach Of Warranty

An attorney specializing in commercial litigation can help you to ascertain whether the defective goods that have been supplied to your business are so defective that a case for breach of warranty can reasonably be made. At minimum, for a successful breach of warranty claim, the injured party must be able to prove (i) the warranty they are relying on was a part of the contract; (ii) that the defective was substantial, and (iii) in the case of implied warranties, if the product was used, that it was used in the intended way. If you are claiming damages, you will also have to prove your loss.

Florida contract law includes several legal remedies for breach of warranty. You may be able to bring a claim for a refund or replacement, a claim for damages, or a claim for rescission of the contract. Of course, your contract will also likely have its own breach clause which regulates the consequences of a breach of warranty. A commercial litigation attorney will interpret your contract and advise you on any steps that need to be followed.

Refund Or Replacement

This is the most straightforward legal remedy. Requiring the seller to replace the defective goods may be a suitable remedy in circumstances where the supply of defective goods is a one-off occurrence in an otherwise successful business relationship. Alternatively, you may seek to return the goods and request a full refund.

Damages

A claim for damages is appropriate in circumstances where the goods supplied to you have caused you to suffer ‘consequential’ loss. For example, if an events company ordered a new marquee tent for a special event, and that marquee turned out to be defective such that the event had to be canceled, the events company could sue its supplier for any damages which it suffered as a result of the event being canceled. In other circumstances, a claim for compensatory damages may be appropriate. This is when the purchaser sues the supplier for costs they incurred in repairing the faulty product/s.

Rescission Of The Contract

A claim to rescind the contract (i.e. terminate the contract) may be brought in circumstances where the breach of warranty was material. You may want to pursue this remedy in circumstances where the breach of warranty was so severe that you no longer trust the supplier and want to terminate your business relationship with them.

Your commercial litigation attorney will consult with you to determine which remedy is most suitable for your circumstances, and which remedy has the best prospects of success in court. They will also carefully consider and interpret the terms of your contract to understand the process that needs to be followed in the event of a breach and ensure that any legal steps taken comply with that process.

Steps To Litigation

Of course, not all defective goods cases will result in litigation. If you have a good relationship with your supplier, you may find that simply picking up the phone, raising your concerns, and requesting a replacement will do the trick.

Unfortunately, not everybody conducts their business scrupulously, and you may find that your supplier flatly denies that the goods were defective. In these circumstances, it is best to consult with a commercial litigation attorney before you take any further steps. They will help you to strategize a path forward.

In many cases, simply issuing the supplier with a notice of breach, which requires them to remedy the breach of warranty within a certain time frame, will spur them into action. If this fails, then your next still will be to institute commercial litigation proceedings – although there is always the prospect of settlement, even after a claim has been instituted.